Best framework for late 20s single person ?

S

SunShine Boy

Guest
Age: 29
Spouse’s/Partner's age: n/a

Annual gross income from employment or profession: 31300
Annual gross income of spouse: n/a

Type of employment: PAYE Multinational

In general are you:
(a) spending more than you earn, or
(b) saving?
Saving

Rough estimate of value of home n/a
Amount outstanding on your mortgage: n/a
What interest rate are you paying? n/a

Other borrowings – car loans/personal loans etc
Personal Loan €11,700 on 7.7% and €10 per month - U First Loan.(Ulster Bank). €8,700 of that was for a car for use by my immediate family. 4 years left.

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card?

Savings and investments:
€3000 for future house deposit - saving €230 a month.
Employer Share Scheme €3,300 - don't have to pay Income Tax on this. Locked away for 3 yrs. Intend to put 8% of salary into this annually.
Emergency Fund €430 - saving €120 a month.


Do you have a pension scheme? Yes
Employer Defined Benefit.
PRSA AVC - €192 per month. I have AVC because:
1. I like the Tax/Prsi I can reclaim.
2. I don't know whether the DB scheme will be still solvent in 30 yrs time - e.g. Waterford Crystal. Multinationals can pull out overnight.
3. I would happily retire early if my financial circumstances allowed.
4. I'm 100% in managed equities and they're cheap at the moment.

Do you own any investment or other property? n/a

Ages of children: n/a

Life insurance: n/a


What specific question do you have or what issues are of concern to you?

I kinda feel guilty posting here as I know I'm not a bad case - there are people in much weaker positions than me. However I would greatly appreciate any hints/tips from people who are 10/20/30 years further down the journey I am on.Planning on being single for the foreseeable future. My main finanial goal is freedom. Want to be able to live my life out from under the constraints of monthly payments to financial institutions.

Don't have a problem with renting accommodation for the short to medium term. Although I think it would make sense for me to become a homeowner in 5 yrs or so - given the increase in "value" to be gotten in current market.

I've turned my financial situation around over the last 2 yrs. Keep a Spending diary. Operate under budgets. I'm just wondering am I missing anything obvious ? When you plan your finances in your own little head, sometimes you can't see the wood for the trees !!

Apologies if this post seems pointless !! :)
 
Guessing you're living at home judging from your message?

I would be very careful about employee share purchase plans. Personally, I would not have more than 10% of personal net worth in them. After all, your company could be the next Enron, GM or Worldcom and you'd be wiped out. If you feel really bullish about the company, or the tax advantages are just too good to dismiss, then you could consider bumping that up to 20%.

The biggest thing that strikes me though is your high debt. For someone on your salary, €20k of debt is very high and will impact on your ability to apply for a mortgage. I would keep the rainy day fund, but use the proceeds of the deposit fund to help clear the personal debts.

When you eventually clear the personal debt, make sure you never rack up anymore again!
 
Hi Raskolnikov

Thanks for your post.

I am actually living at home. Let me hasten to add tho that I'm not a leech living off my parents goodwill. I pay 2.7 times the going rate for a shared house in my town in order to help my family thro their own financial issues.

I agree with you re the ESPP - it's dangerous to put all your eggs in one basket. My plan is to hold the shares for the minimum period (3 yrs) then immediately transfer them to some Index-tracking fund e.g. Quinn Freeway - thereby diversifying. The company is in a relatively strong position in the current climate and I expect that to remain so for the medium term.

My total debt is €11,700. This INCLUDES the €8,700 car loan. I guess I could pay the 3000 towards the debt but then I'd have to start off saving for a deposit from scratch again. The Loan will be repaid in 4 years. By that time, I should have approx $14-15000 saved for deposit. I was considering refinancing the Loan over a shorter period - say 3 yrs. However, my budget is pretty tight and any increase in monthly payment would eat into my Fun Money.
 
Sunshine, I would maximise the amount you can put into your ESOP scheme and if you have any worries about the company just transfer after they are vested. This is a superb tax-efficient method of saving and one I'm focusing on rather than investing in AVS/PRSA's etc. You can use salary foregoing to boost this investment.

The major advantage is that you have full control over the investment and also know it's value at any particular time whereas my pension value is 'woolly' at the best of times.

Good luck.
 
Thanks Galwegian !!

I took the max ESPP amount in 2008 and intend to do the same going forward.

I can't spend it if I can't get my hands on it for 3 years - helps with self-discipline !! hehe. I don't really think of it as my money - I want to steadily put it aside and hopefully it will grow into something substantial over time.
 
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